Chinese Economics Thread

[siegecrossbow]

GDP unfairly favors non-value added transactions, while energy consumption unfairly favors heavy industry.

Ground truth is somewhere in between.

Imo it's just hair splitting going back and forth arguing whether China leads econonically by 20% or by 2x. When the more impactful factor is that raw economy size alone does not finish great power contests. US can still be a threat through things not measured economically, by having a much more mobilized society, having undermined international organizations, having geographic proximity through bases in some hot zones etc.

For example, US still has indirect control over much of global oil production, this might not help them reach China in GDP, but it makes them a real threat towards China's partners in the third world.

US is dangerous nearly never because of economical reasons, but because China has allowed them in the past to unfetteredly corrupt the UN, build up their military and collect colonies from weak countries. With these tools, US still represents a threat to Chinese security, despite their diminished home economy. It is misleading to brag how much larger the CN economy is, when it's not the most crucial battlefield anymore. Who really cares how much more electricity we can consume/make, more cars we can build or more valued transactions happen yearly, if these economic advantages are not used to directly curtail American influence?

You are wrong. Shareholders add a lot of value to the real economy.

 

[jli88]

I wanted to write a post on a couple of issues that were raised in the thread recently.

China's Bond Yields

The basic supply demand rule drives yields, so when there is huge demand for bonds, the yields will come down, and the existing bonds will have higher value. As someone pointed out, it doesn't impact government payouts for already issued debt.

However, when the government issues new debt, it will indeed be able to issue them at lower interest, so over time government does benefit with lower interest expense.

So then all good?

Not really. It depends on why this dynamic is being played.

Why are institutions/investors buying bonds with only 2% nominal yields?

This can often mean that these institutions/investors don't find any other attractive asset class. Which means that they don't have confidence in real estate (understandable), stock market, bank deposits, etc. This however leads to productive sectors of the economy being starved of funds.

This dynamic recently played out when the July outstanding loans fell sharply and much lower than expected.

The other fear is of a bubble. High demand of bonds --> Bond value rising + Lower yields (nominal gain in investment) --> Higher demand of bonds. However, this bubble can't go on forever, since the newly issued debt will be issued at lower interest rates, so they don't gain any value.

What does the PBoC think?

Let's see what the regulators think.

Some actions from regulators:

1. PBoC has been warning of bubble in bonds.
2. Stopped some banks to buy bonds.
3. Fined some enterprises who were dealing in bonds.

PBoC is trying to stop this huge demand surge in bonds. Why?

Because PBoC for whatever reason doesn't want this bond situation. Why?

 

[siegecrossbow]

Well then they are using some crackpot sleepystudent level measurements. I've seen some shit. Like 2nd degree growth statistics I.e. the rate at which China's growth is growing is slower than US' at this particular point (which also wouldn't make US have a bigger cumulative economy, but that's beside the point). Or the ever funny stock market is the true economy gigacope.

Smoller goods consumption, smoller gdp, smoller advanced goods production, smoller basic resource production, there's basically nothing non crackpot you can use to argue that US secretly had a larger economy all along. US has larger stock market and larger oil production, which not a single non retarded person will take as a sign of an overall larger economy. (and also the meme response, largest prison population)

So it's not worth to engage with them.

Did they literally take the derivative of China’s growth in their mental gymnastics exercise? Who said that Westerners are bad at math again?

 

[GiantPanda]

According to electricity production, do you then believe that India's economy is almost twice the size of Japan's? Or that Russia is more than twice the size of Germany?

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The fact of the matter is that electricity consumption is heavily skewed towards heavy manufacturing, primary production etc.

We know that China has almost twice the MVA (manufacturing value added) of US, that's where all that electricity is going to.

This is PPP GDP -- India is nearly twice the economy of Japan:



Russia is somewhat the exception that proves the rule. Russia is heavily skewed towards older industry left behind from the USSR. No other country can have this profile.

You want to say China? No, China unlike Russia do not have older industry because most of today's China industrial complex was litterally built after WTO in 2001.

The issue is really how China's service economy is simply uncounted versus how overcounted they are for the US.

Anyone who actually been to China and seen their Meitun, JD, Taobao, Douyin and the like would think that the US has a bigger service sector? Not just bigger, the US would need to overwhelm China's service massively to make up for manufacturing deficit.

Sorry, not only is the Chinese sector not overwhelmed by the US one but I think it is actually larger. The advent of Wechat and Ali-pay alone tells me that. Those payment methods is not Chinese government. They are companies from China's service sector.

BTW, modern services aren't that less energy intensive think Amazon uses less electricity running its data centers than GM?

Sorry, China simply has a much larger economy.

If you insist on the now Western narrative that electricity usage is not a good proxy then look at the goddam consumption -- China has far greater sales of consumer goods. Multiples in sales of cars, ships, HSR, ACs, vacuums, cranes, practically every major item for households and business.

 

[tphuang]

I deleted a few posts since people do not realize that when I say to not continue, that means don't continue.

Also, moderators don't appreciate members overtly calling out to ban certain members in threads. Just keep in mind that if you are constantly reporting certain member with comment "you should ban this user", that's more likely to get your request ignored.

 

[Wrought]

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shows retail slightly up, industrial slightly down. Housing remains depressed.

Retail sales rose by 2.7% in July from a year ago, beating forecasts of 2.6% growth according to a Reuters poll.

Industrial production rose by 5.1% in July from a year ago, below the poll’s forecast of 5.2%.

Fixed asset investment for the first seven months of the year rose by 3.6%, below the 3.9% growth analysts had predicted. Within fixed asset investment, the drag from real estate worsened, down by 10.2% on a year-to-date basis as of July, versus a drop of 10.1% as of June.

The urban unemployment rate ticked higher to 5.2% in July versus 5% in June.

 

[Maikeru]

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shows retail slightly up, industrial slightly down. Housing remains depressed.

Really, if it's a 0.1% miss or overshoot, what the hell difference does it make? Surely it's the absolute levels which matter, and whether they are + or -. In which light, the retail sales aren't great however you slice it.

 

[proelite]

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shows retail slightly up, industrial slightly less up. Housing remains depressed.

Fixed.

 

[Wrought]

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shows retail slightly up, industrial slightly less up. Housing remains depressed.

Fixed.

No, your "fix" is logically incoherent. Retail is slightly up and industry slightly down, relative to predictions. But in absolute terms, retail is slightly up and industrial is up more. Not less. So now your "fixed" statement makes no sense because its frame of reference is self-contradictory.

Your shortsighted "fix" only addressed one piece, and in doing so, broke the whole.

 

[escobar]

China's dominance of critical minerals markets is often demonstrated through the lens of its production and processing capacity. Less examined is its dominance of the infrastructure governing these markets.

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